A share repurchase is when a company uses its own cash to buy its own stock off the open market because management believes the price is below what the business is actually worth. Berkshire Hathaway (BRK.A, BRK.B) did that at sharply higher volume last quarter, spending $4.5 billion on buybacks in the second quarter after spending only $235 million in the first. That acceleration is the clearest signal in Berkshire's weekend earnings release.
What the filing actually says
Berkshire's written repurchase policy, quoted in its 10-Q filing, permits buybacks "any time that Berkshire's Chief Executive Officer, after consultation with the Chairman of the Board, believes that the repurchase price is below Berkshire's intrinsic value, conservatively determined." CEO Greg Abel and board chairman Warren Buffett are those two people.
The filing breaks the activity by month. In May, Berkshire repurchased 65 Class A shares and 1.45 million Class B shares at an average price of $476.01 per B share. In June, it repurchased 413 Class A shares and 7.13 million Class B shares at an average of $487.98 per B share. Class B shares currently trade around $511, meaning the stock would need to fall about 5% to match that June average. Class A shares trade above $700,000 apiece, making the B shares the practical reference point for most investors. That $487.98 level is not a guaranteed floor, but it is a specific data point investors can weigh against a live quote. Berkshire does not hold earnings calls with analysts, so the 10-Q is where these numbers live.
The quarter's results
Berkshire Hathaway, with a market capitalization of $1.1 trillion, owns dozens of companies including Geico, Duracell, Fruit of the Loom, Pampered Chef, and BNSF Railway, and holds a $263 billion investment portfolio that includes Apple (AAPL), American Express (AXP), Coca-Cola (KO), Alphabet (GOOGL), and Bank of America (BAC). Revenue for the second quarter was $101.81 billion, up 10% from a year earlier and above the analyst consensus of $96.52 billion. Operating earnings were $12.98 billion, up 16% year-over-year. Net profit was $25.67 billion. Earnings per share came in at $6.02, beating estimates of $5.13.
Within those totals, manufacturing, service, and retailing earnings grew 24% year-over-year to $4.47 billion. Berkshire Hathaway Energy posted profit of $891 million, up 27% year-over-year. BNSF Railway earned $1.56 billion, up 6%. Insurance net earnings fell to $1.73 billion from $1.99 billion a year earlier. The quarter reversed a 14-quarter streak of net stock sales. Cash shrank from $397.4 billion to $365.5 billion. Analysts carry a consensus price target of $531.60 and a "Moderate Buy" rating on the stock.